Provisions and Contingent Liabilities: AS 29 Year-End File
Year-end provisions are judgement-heavy. Finance should not wait for auditors to ask whether a claim is probable, possible or remote.
Use the LRS and Overseas Tour TCS Calculator — Tax Year 2026–27 to apply these points to your figures or facts.
Detailed analysis
AS 29 deals with provisions, contingent liabilities and contingent assets. The close file should capture obligation, probability, estimate, legal correspondence, board/management assessment and disclosure rationale.
Practical example
A customer claim of ₹40 lakh is pending. Legal says settlement is possible but amount uncertain. Finance prepares case summary, legal opinion, probability assessment, provision/disclosure decision and board/audit committee note.
Evidence and control checklist
| Area | What to check | Evidence to save |
|---|---|---|
| Obligation identification | Legal, tax, warranty, onerous contract and restructuring items. | Claims register and department confirmations. |
| Probability assessment | Probable, possible or remote classification. | Legal/management memo. |
| Measurement | Best estimate and range of exposure. | Computation and support. |
| Disclosure | Provision vs contingent liability note. | Financial statement disclosure draft. |
| Review and update | Movement from opening to closing balance. | Provision roll-forward and approval. |
For the connected rule, example or next step, see Audit Adjustment Tracker: Passed, Unpassed and Management Representation File.
Common mistakes
- Booking provisions as plug numbers.
- No legal confirmation.
- Not updating old contingent liabilities.
- Ignoring warranties/onerous contracts.
- No disclosure rationale.
Official reference framework
Based only on official India Code, MCA and ICAI source pages listed below. Check the latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
Official sources used
This article is intentionally source-limited to official India Code, MCA and ICAI material. Source validation date: 17 June 2026. Verify final positions with latest Companies Act, Schedule III, accounting standards, Ind AS/AS applicability and auditor guidance before closing or filing.
- MCA: Accounting Standard (AS) 29 Provisions, Contingent Liabilities and Contingent Assets
- ICAI: Compendium of Accounting Standards
- India Code: Companies Act, 2013 Section 129 - Financial statement
- India Code: Schedule III to the Companies Act, 2013
For the connected rule, example or next step, see AR Ageing and Expected Collection Review: Revenue-to-Cash Control File.
FAQs
A liability of uncertain timing or amount recognised when criteria are met under applicable standard.
A possible obligation or present obligation not recognised due to uncertainty/criteria.
Claims need probability and exposure assessment.
Yes. Circumstances and probability may change.
Claims register, legal opinion, computation and disclosure note.
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- Business Case Studies & Corporate Strategy
- Official starting point
- www.mca.gov.in
Page source links
For the connected rule, example or next step, see NPS Deduction for Tax Year 2026-27: Section 124 Guide.